New Financial Consumer Protection Rules

Summary#

The Financial Consumer Protection Framework Regulations (SOR/2021-181) are final rules that bring together and update how federally regulated banks must treat retail customers. They set a firm complaints deadline (56 days), raise the maximum Government of Canada cheque a bank must cash for a non-customer to $1,750, clarify some coverage rules, and require clearer disclosures; they come into force on June 30, 2022. The government estimates the rules will cost industry about $19,419,225 (present value) over 10 years.

What it does#

• Consolidates consumer rules that used to be spread across many regulations into the single Financial Consumer Protection Framework Regulations.
• Requires banks and authorized foreign banks to deal with consumer complaints within 56 days of receiving them.
• Raises the amount a bank must cash for a person without an account from $1,500 to $1,750 for Government of Canada cheques.
• Updates credit-card disclosure rules so consumers are only liable for unauthorized transactions when they have been grossly negligent, and they are not liable for fraudulent use after they report the risk.
• Clarifies that derivatives and eligible financial contracts are excluded from the definition of “product or service” under the consumer rules.
• Requires notice about deposit-type instruments (like GICs) prior to automatic renewal, and allows banks to direct customers to a website or phone number for the most up-to-date renewal rate.
• Repeals and replaces a number of older bank-focused regulations and moves some rules that apply to other federally regulated institutions into separate regulations for those sectors.
• Sets the official coming-into-force date as June 30, 2022.

Who's affected#

• Consumers and everyday banking customers — especially people who cash Government cheques, hold deposit instruments (for example, GICs), use credit cards, or file complaints with their banks.
• Banks and authorized foreign banks, which must update procedures, disclosures and complaint-handling systems to meet the new timeline and disclosure rules.
• Other federally regulated financial institutions (for example, trust and loan companies) in cases where rules were moved out of bank-specific regulations.
• Public Services and Procurement Canada — it will update indemnity rules used when banks cash Government cheques.
• External complaints bodies and the Financial Consumer Agency of Canada (FCAC), which will supervise and enforce the new rules.

If any part of who is affected is unclear in the source, that is noted above.

Why it matters#

• Faster complaint resolution (a clear 56-day deadline) means consumers should get answers and fixes sooner. That can reduce stress and financial harm from unresolved problems.
• Raising the cheque-cashing limit to $1,750 helps people who rely on government benefit cheques get their cash without fees, even if they are not bank customers.
• Clearer credit-card liability rules better protect people from bearing the cost of fraud they did not cause, and make banks’ responsibilities easier to understand.
• Advance notice and easier access to current GIC rates give savers more time and information to decide whether to let a product renew.
• Consolidating dozens of scattered rules into one regulation makes it easier for consumers, banks and advisors to find and understand the rules that apply.

Costs and enforcement: the government estimates total industry and implementation costs of about $19,419,225 (present value) over 10 years. The FCAC is responsible for supervising compliance and can take a range of actions if banks do not follow the rules.